New ways to engage customers in co-designing your company's future - a weblog to complement the book, Outside Innovation, by Patty Seybold

Description

What is Outside Innovation?

It’s when customers lead the design of your business processes, products, services, and business models. It’s when customers roll up their sleeves to co-design their products and your business. It’s when customers attract other customers to build a vital customer-centric ecosystem around your products and services.
The good news is that customer-led innovation is one of the most predictably successful innovation processes.
The bad news is that many managers and executives don’t yet believe in it. Today, that’s their loss. Ultimately, it may be their downfall.

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Observations

LEAD USERS

Eric von Hippel coined the term "lead users" to describe a group of both customers and non-customers who are passionate about getting certain things accomplished. They may not know or care about the products or services you offer. But they do care about their project or need. Lead users have already explored innovative ways to get things done. They're usually willing to share their approaches with others.

LEAD CUSTOMERS

I use the term "lead customers" to describe the small percentage of your current customers who are truly innovative. These may not be your most vocal customers, your most profitable customers, or your largest customers. But they are the customers who care deeply about the way in which your products or services could help them achieve something they care about.

LEAD CUSTOMERS AND LEAD USERS

We’ve spent the last 25 years identifying, interviewing, selecting, and grouping customers together to participate in our Customer Scenario® Mapping sessions. Over the years, we’ve learned how to identify the people who will contribute the most to a customer co-design session. These are the same kinds of people you should be recruiting when you set out to harness customer-led innovation.

HOW DO YOU WIN IN INNOVATION?

You no longer win by having the smartest engineers and scientists; you win by having the smartest customers!

CUSTOMER CO-DESIGN

In more than 25 years of business strategy consulting, we’ve found that customer co-design is a woefully under-used capability.

Customer Co-Design

May 06, 2015

Dealing with Unexpected Expenses

Over the last two decades, when working with financial services firms and their end-customers, we invariably encounter a common Customer Scenario: "I don't have enough money to pay for an unforeseen expense." Oddly enough, It doesn't matter how affluent the customers are. They may still have to scramble to pay for a kid's car repair, a large medical bill, or any unexpected large expense. Of course, we're all supposed to have a rainy day fund — savings accounts or liquid investments we can draw upon in the case of emergencies — but people are invariably caught short, and it's very stressful.

Most financial services firms profit from this customer "Moment of Truth" by extending lines of credit on maxed out credit cards, providing short-term loans (often backed by home equity), or offering payday loans.

One enlightened bank president had another idea--which he came up with in one of our Customer Scenario Mapping customer co-design sessions with middle-income parents: a "Life's Exceptions" account. This was a quickly-triggered rainy day fund that automatically moved money from savings to checking and added quick access to a pre-approved-for-all-existing-customers' low-interest loan, if necessary, to make up the difference. Triggering a "Life Exception" generated a budgeting/cash flow management application that would automagically appear to help the couple repay the emergency money they had needed. The budget and proposed repayment plan would be pre-populated based on the customers' income and expense history (even if they weren't already using a budgeting or cashflow management tool). For a variety of reasons, the bank chose not to implement this innovative idea that their customers and their execs co-designed almost 10 years ago. Too bad.

Dealing with Uneven Cashflow

What caught my attention this week was a write-up about a soon to be launched mobile app, called Even. It's designed to help people who have a reliable source of income, but uneven cashflow. So, for example, people who work at Starbucks or at another retailer that varies workers' hours every week. People know they'll be working, but they don't know exactly when they'll be working or how much pay they'll receive each week. This is a common problem for a growing percentage of the global workforce.

April 09, 2015

“Your piece about Zopa (which I hadn’t heard of) is fascinating, and reminds me of a quote I saw on LinkedIn yesterday:

‘In 2015 Uber, the world’s largest taxi company, owns no vehicles; Facebook, the world’s most popular media owner, creates no content; Alibaba, the most valuable retailer, has no inventory; and Airbnb, the world’s largest accommodation provider, owns no real estate.’ (Marcella Shinder, Nielson)

It sounds like a Zopa-like company might become the world’s largest lender (investor?), without any capital.

What is going on here? It appears there’s a whole new niche in the economy for P-to-P coordination at scale. Is there a name for that niche? What does it look like when you take that model to its logical limit? Does it make large companies at risk of being replaced by networks of independent agents supported by coordination apps (i.e., Uber and taxi companies)?”

I agree with Jeff’s observation that something profound is going on here.

P2P in Finance. I just returned from Africa, where P2P money-swapping via mobile phones is ubiquitous. The primary form of banking for most families is Savings and Credit Associations (SACCOs) that are formed by groups of villagers in every community. People put in a few dollars each week, and borrow money at interest from the kitty when they want to buy a pig or fix their roof. At the end of each year, the profits are distributed out based on the amount each person has saved/invested. This tried and true model has been flourishing for decades in third world countries. Zopa and other online savings and loan enterprises around the world are an electronic equivalent of a “spread the risk” model that has been well-proven.

Every mobile network in Uganda lets you move money from your phone to someone else's phone.

January 29, 2015

We all know that you get what you measure. When we experience a dysfunctional organization, we know that we should be suspicious of the objectives that managers and employees are motivated to achieve. In fact, based on the experiences we’re having, we can often guess at the firm’s compensation structure and/or culture. Here’s one example that is top of mind for me: Someone hit my car when it was parked. Their insurer was GEICO. Within 30 minutes of the accident, GEICO called me, told me they were taking responsibility and arranged for appraisal and repair. GEICO is obviously optimizing rapid claim settlement for “no brainer” claims.

U.S. Healthcare Industry: Focused on Productivity and Quality Metrics

There’s been a lot of discussion about how broken our healthcare system is. We pay for transactions, not outcomes. Physicians are measured on their “productivity,” e.g., how many patients can you see (and bill for) in a day? Hospital staff are rewarded for getting patients out of beds as quickly as possible, but fined if that patient winds up back in the hospital within 3 weeks.

Mobile app development is only one of many areas in which customer co-design shines. Ideally, you want customers to lead any new product or service innovation or re-design activity. But let’s get real. Embedding customers into your internal design and development processes is hard. It’s counter-cultural for most organizations.

December 05, 2014

Several people sent me the same article from this Sunday’s New York Times: Retirees Turn to Virtual Villages for Mutual Support. They all knew that I’m interested in, and working on, the creation of “virtual assisted living” solutions. The article describes “Virtual Villages” – most of these are part of the Village-to-Village Network, which started with the creation of the Beacon Hill Village in 2001. What interests me about this grass roots movement to create senior-to-senior support networks around the country and around the world are three things:

It’s a great example of customer-driven innovation. Seniors are banding together to create the same services they would enjoy if they moved to a purpose-built senior living community, but without moving out of their own homes.

It speaks to my condition. I just turned 65, my husband is older than me, and my mom is older still. We are figuring out the best living and support arrangements for aging with grace.

I’m now immersed in such a grass roots effort in my own community (which is the topic of my article this week). Among other things, we’re trying to decide whether to join the Village-to-Village Network or take our own path.

In future articles, we’ll describe some of the lessons learned from the Village-to-Village movement, and I’ll keep you posted on our own efforts in Boothbay, Maine. If you’re involved in similar efforts for and with your own family members and communities, feel free to reach out.

November 14, 2014

At a recent TEDx, I encountered Zoe Weil (pronounced Zo While). She is a pioneer in what she calls “humane education” and “solutioning.” You can find more info on her Institute for Humane Education web site. She describes being a Humane Educator as somebody who teaches about the interconnected issues between human rights, environmental preservation, and animal protection. She was introduced to this field in 1987 through a course taught to middle-school kids in Philadelphia.

Zoe’s teaching work reached a tipping point as a result of her TEDx talk in 2011 in Brunswick, Maine. She gave a talk entitled, “The World Becomes What You Teach,” in which she spoke about the “Star Trek vision” of a healthy planet, with peace and prosperity—a planetary population that lives in peaceful coexistence with the populations of its planetary neighbors. Star Trek stories are full of adventures in which people explore and learn; not conquer, she said. She contrasted that vision with the current world full of conflict, human and animal abuse, climate change, and unsustainable practices. And then she offered her solution:

“There’s one system we need to tweak a little bit and if we do that we can solve every problem in the world. That key system is schooling.… We provide every student with the knowledge, the tools, and the motivation to be conscientious choice-makers, and engaged change-makers for a restored, and healthy and humane world for all. Or, another way of putting it: I believe that we need to graduate a generation of solutionaries…there’s no doubt in my mind that they could solve every single problem that we face.”

~ Zoe Weil, TEDx Talk, 2011

Last week, Zoe talked about all the wonderful attention and momentum she has achieved since her TEDx talk in 2011:

“The problem was that there were only a handful of us who were teaching about the interconnected problems of human oppression, rampant consumerism, animal abuse, and environmental destruction… I had the solution to all the world's problems: address the system of education, students can be solutionaries.”

~ Zoe Weil, November 9, 2014

Zoe then went onto describe some of the many things she has accomplished in furthering this movement, including teaching many workshops to kids and teachers, starting a program for graduate students, and:

“Last year, we created the first solutionary school in the pre-K through 12th grade. The curriculum is open source and shareable throughout the world.”

I found myself thinking about the powerful conversations I had had the same week with two graduates of URDT schools—institutions that are located halfway around the world, in rural Uganda. One of the conversations was with Catherine Namwezi, an alumna of the URDT Girls School (K-13); the second, Godliver Businge, is an alumna of both the African Rural University and the URDT Vocational Institute. These young women embody the knowledge, talent, skill, and motivation that Zoe described. Their education was obtained on a campus five hours west of Kampala on dirt roads, in the midst of striking rural poverty. They are part of this new generation of change-makers that Zoe passionately yearns for.

For 25 years, the Uganda Rural Development and Training programme (URDT) has been teaching local women and men, children, and young adults not to solve complex problems, but to create the world they want to live in. URDT’s founder, Mwalimu Musheshe, would probably agree with much of what Zoe Weil teaches and practices, but he would emphasize a creative orientation, rather than a problem-solving orientation.

“URDT provides transformational education to create effective change agents and change-makers within an African development context. URDT applies theoretical learning, innovative instruction, and field practice, so that its graduates can create conditions for rural people to improve their lives, transform their communities, awaken inherent leadership, and increase their capacity for self- generating and sustainable change.

The curriculum promotes visionary leadership, systems thinking, and sustainable development as its core pillars. It aims to give students a life-transforming experience by directly using principles of the creative process in their lives, in families, and in whole communities to create their own desired circumstances."

There are actually three educational institutions on the URDT campus that share this common curriculum: a Girls School (ages 10-18), a Vocational Institute, and a University for women, African Rural University (ARU). Yesterday, ARU was mentioned on Melinda Gates’ blog, Better By Half, in a post by Harvard Professor Calestous Juma, who is a big fan of ARU’s education and the hope it provides for African women.

Is there a connection between human rights and animal rights in the URDT education as there is in the Humane Institute’s curriculum? Absolutely. There is an animal preserve on the URDT campus as well as a sustainable organic farm. Is there an appetite to teach 10 year olds how to envision a better world and to equip them with the tools they need to achieve that better world? Absolutely!

Educating Change Makers to Create a Sustainable Planet

If you’re interested in Zoe Weil’s message about the need to “tweak” the education system in order to “solve” all the problems in the world, let me introduce you to some of the graduates of URDT’s educational institutions. Meet this new generation of change makers—the ones who will create the sustainable world we all want to live in.

October 27, 2014

Since Dave deBronkart’s visit to my community on the coast of Maine this past summer, our Health & Wellness Foundation has launched our own Patient Empowerment program. Led by a local surgeon, Dr. Stephen Cook, and supported by our retired pharmacist, Rick Powis, a small group of 18 patients have formed our first study group, learning how to take ownership and control of our own personal medical records and learning how to do our own health research in order to partner with our physicians. We’re just getting started, but the appetite and interest for this work is huge!

Our first Study Group forms the core of a “buddy program” that will fan out across our communities to help more families take control of their own health and care. The initial group of patients will evolve and refine the program and then ramp it up. Having a locally respected physician leading the charge will help our local medical practitioners take advantage of all the legwork and research that engaged patients are willing and able to do on their own behalf. Running this as a community-led initiative rather than as a healthcare system-led initiative also has advantages. Patients feel more engaged and empowered and they’re able to share tips on how to deal with different primary and specialty care practices, health systems, and insurers.

Mayo’s endorsement of an outspoken patient advocate as their “visiting professor” has gratified Dave. He said:

“Boy, is this a thrill: the Chief Residents at the Mayo Clinic have invited me to be their Visiting Professor in Internal Medicine next March. A patient. As Visiting Professor… This is the first formal recognition I’ve heard of, from any academic medical center, of this new imperative for physicians to join forces with patients as colleagues.”

I agree. This is a fantastic acknowledgement of the increasing importance of patient empowerment and participatory medicine in the medical field.

“Every year, Mayo Clinic Internal Medicine Chief Residents have the opportunity to invite a Visiting Professor to spend several days engaging in educational activities and speaking at Medical Grand Rounds. Invitations are meant to reflect upon the personal interests of the chief residents and the messages we wish to convey to our Medical Grand Round audience – which consists of trainees, consultants, and researchers across the Mayo Clinic Health System. Over the last three years, previous chief residents have selected leaders in the fields of medical education (Dr. Jeffrey Wiese), quality and safety (Dr. Robert Wachter), and the CDC’s epidemic intelligence service (Dr. Douglas Hamilton).

This year, we wanted our choice to represent a field with a similarly widespread impact on the future of medical practice, but also reflect our personalities with an “outside of the box” message. At the same time we were brainstorming, the Mayo Clinic was celebrating 150 years of service, and we were reminded of the Clinic’s credo:

“The best interest of the patient is the only interest to be considered, and in order that the sick may have the benefit of advancing knowledge, union of forces is necessary. It has become necessary to develop medicine as a cooperative science; the clinician, the specialist, and the laboratory workers uniting for the good of the patient, each assisting in elucidation of the problem at hand, and each dependent upon the other for support.”

– Dr. William J. Mayo

“Dr. Will Mayo was stating the importance of a diverse medical team coming together to attain a common goal – the foundation of our institution’s mission has been built around this belief. However, in our experience, we have found it as important to have a “union of forces” between providers and the patients who entrust us with their care.

Patient engagement and empowerment is a natural extension of Dr. Will Mayo’s vision of a medicine as a cooperative science. We are therefore honored to announce Dave deBronkart (aka “e-Patient Dave”) as our 2015 Visiting Professor to help spread this powerful message. We look forward to his March, 2015 visit!”

August 28, 2014

In the northern hemisphere, early September is a natural time to take stock and to set priorities. As our kids go back to school, we adults find ourselves in the same mindset: excited about learning new things, accomplishing something important, and having fun “playing” with our colleagues and customers. So, it’s a natural time to set some goals and priorities. Why not start by taking stock of how to improve your customers’ end-to-end experience of using your products and services, in doing business with you, and in doing their jobs.

I was reminded of how important this is as I listened to a long-time client, the CEO of a high tech company, recount how valuable he found an off-site strategy meeting to be. He used the Blue Ocean Strategy method to lead his team through a strategic planning session. “The most valuable part for us,” he reported, “was thinking about what’s going on in our customers’ lives before they learn about our products and after they’ve been using them for a while. When we really drilled into those customers’ (users, decision-makers, influencers, maintainers) contexts, we realized how much more we could be doing to make their lives easier.” As a result, his team created a much more targeted partner “shelf space” strategy, changed their account reps’ MBOs to focus more on after sales relationship building, and refocused their social media focus and their documentation to target customers’ “moments of truth.”

July 31, 2014

We’ve all probably done this: a business that sells to business customers offers a special deal or promotion to attract new business or to liquidate inventory, and then is unable to convert those bargain hunters into loyal, repeat customers. For example, a restaurant supplies store offers a great bargain on coveted cookware, hoping to lure new customers and/or to sell additional products, but only the bargain hunters show up. Or an event organizer provides free or highly discounted booth space at an undersold trade show in order to make the trade show more appealing to business customers, and the organizer only succeeds in alienating his current exhibitors; not attracting new ones for the next event. Or a software firm offers unlimited use free software with a premium upgrade, but nobody opts for the upgrade.

Luring New Business Customers with Evaluation Kits. One of my favorite examples of offering “free samples” or “at cost samples” to B2B prospects was National Semiconductor’s evaluation kits and boards. When Phil Gibson was running Web marketing for National Semiconductor, he developed a very sophisticated software toolset, known as WEBENCH®, which design engineers could use to design one-off evaluation units. (National Semiconductor was acquired by Texas Instruments—in part because of the value of these tools and this marketing approach.) National would then ship either a kit for the engineer to build the prototype board, or the company would assemble the one-off custom board and ship it out the next day—at close to cost.